Products
Insurance and Blanket Fidelity Bond for Broker-Dealers
Meeting the difficult insurance challenges of securities brokers and dealers can be viewed as higher risk so the risk profiles are more difficult to assess. Liftman Insurance can help securities brokers and dealers determine their needs and gain access to the necessary coverage. More than 2,500 investment firms rely on Liftman Insurance. Click any product below to learn more about the different types of coverage.
Errors & Omissions and Directors & Officers Liability
Errors & Omissions Insurance (also known as E&O or Professional Liability Insurance) protects your firm, its employees and its registered representatives if they are sued by clients for any actual or alleged negligent act, error or omission committed in selling securities and insurance products. Coverage includes legal defense costs, even when the claim has no merit.
If your representatives also provide investment advice, the policy can be broadened to cover advisory services, an important point for hybrid and dually registered firms.
Directors & Officers Liability Insurance (also known as D&O Insurance) provides coverage for directors and officers of an investment advisory firm for allegations brought by stakeholders for errors in judgment, breaches of duty, and wrongful acts related to the firm’s activities. Since a director or officer can be held personally responsible in some cases, most directors and officers will demand that their organization provide them with D&O Insurance to protect their personal assets.
Call 617.439.9595 to apply
Cybersecurity Insurance
Broker-Dealers maintain exactly what cybercriminals want: account numbers, Social Security numbers, and credit card numbers, and the ability to move client funds. Broker-Dealers are subject to the SEC amended Regulation S-P, which requires incident response programs, oversight of service providers, and notice to affected individuals after certain breaches.
Cyber policies may cover both the firm’s losses and claims brought by regulators and clients including:
- Network extortion and ransomware payments
- Social engineering and fraudulent funds transfer (firm’s own funds)
- Data forensics, breach notification and credit monitoring
- Regulatory defense, fines and penalties, where insurable by law
- Business interruption and reputational loss
- Public relations expenses and media liability
Broker-Dealer Fidelity Bonds (FINRA Rule 4360)
FINRA Rule 4360 requires member firms that must join SIPC to maintain a Blanket Fidelity Bond, with a minimum amount based on the firm’s net capital requirement. The bond protects your firm, and ultimately your customers, against losses from employee dishonesty and certain types of fraud committed by others.
- Dishonesty of employees and independent registered representatives
- Non-aggregate limits that apply to each loss
- Email-initiated transfer fraud and social engineering fraud
- Computer systems fraud, including hacking and viruses
- Legal expense coverage in addition to the bond limit (up to 100% of the limit), plus audit and claims expense
- ERISA coverage for your firm’s pension and benefit plans at no extra charge, up to the bond limit with a $500,000 per-plan cap
Call 617.439.9595 to Apply Now
Employment Practices Liability Insurance
Employment Practices Liability Insurance covers claims by employees, former employees and job applicants concerning discrimination (based on age, sex, race, disability, etc.) wrongful termination, sexual harassment and other employment-related allegations.
Call 617.439.9595 to Apply Now
Securities Transfer Agents Medallion Program Surety Bonds
When a broker-dealer guarantees a client’s signature on a securities transfer that turns out to be forged or unauthorized, liability is incurred. STAMP (Securities Transfer Agents Medallion Program) bonds are signature guarantee surety bonds that protect investors, securities issuers and transfer agents against such fraud.
SEC Rule 17Ad-15 requires transfer agents to use a consistent method for accepting signature guarantees from eligible guarantor institutions. The medallion stamp confirms that the signature is backed by a surety bond. Without this medallion stamp , account transfers and re-registrations stall, and clients notice the delay.
Liftman Insurance can help you see if your firm qualifies for the program, determine the required bond amount, and assist in completing the application.
Call 617.439.9595 to Apply Now
Pension / ERISA Bonds for Your Firm’s Own Plans
Broker-dealers that sponsor a 401(k), profit sharing or pension plan for its employees are bound by ERISA Section 412 requiring that any individual who handles plan funds be bonded. The bond protects the plan, not the firm, against losses from fraud or dishonesty by the people who manage or handle the assets.
Section 412 of ERISA requires a bond limit of 10% of plan assets, with a minimum of $1,000 and a maximum of $500,000 per plan ($1 million for plans holding employer securities). The plan’s annual Form 5500 asks whether the bond is in place, and a missing bond can draw attention from the Department of Labor.
A pension bond is different from a fidelity bond: A pension bond pays the plan, while your fidelity bond pays the fund. The insurance company that Liftman works with can typically expedite the issuance of a pension bond. The pension bond includes inflation guard coverage to remain in compliance.
Call 617.439.9595 to Apply Now
Not sure which coverage your firm needs?
Talk to a Liftman specialist. We will review your current program, point out gaps, and get you a quote. Even if you are not a client, you will like how quickly we understand your situation.
